Dean Foods Up on Earnings and WhiteWave IPO
Dean Foods Company (NYSE: DF), the largest milk processor in the United States, traded up Wednesday after reporting second-quarter results on Tuesday. The company also announced that one of its subsidiaries registered for an initial public offering.
Dean Foods reported strong second-quarter earnings despite a surge in the price of milk in July. The company posted a net income of $56 million compared to last year's second quarter net loss of $51 million. Net sales decreased from $3.3 billion to $3.1 billion due to lower dairy commodity costs.
Chairman and CEO Gregg Engles commented, "We continued to build on our momentum in the second quarter, delivering strong growth across all of our operating segments. In addition to each of our businesses executing well against their stated plans, we also continued to benefit from disciplined expense control across the organization."
The company also announced that its subsidiary, The WhiteWave Foods Company, filed for an IPO of its class A common stock with the US Security and Exchange Commission. After the IPO, Dean Foods will own at least 80 percent of the common stock and will distribute its remaining interest of WhiteWave to shareholders. The IPO could be worth $300 million. The WhiteWave Foods Company manufactures, develops, markets and sells a variety of dairy products and accounts for 40 percent of Dean Foods' profit.
Prior to reporting earnings on Tuesday, Dean Foods had been down about 26 percent since July 1. Throughout July, there were extreme weather conditions that hurt farmers. The US Department of Agriculture reduced its production estimates for milk and raised its price forecast. Dean Foods saw its biggest drop in eight months after the announcement. The higher milk prices created higher costs for milk producers.
Looking ahead, the company expects its segments to continue to grow in the third-quarter. Based on the company's strong first half performance in 2012, Dean Foods increased its full year earnings per share outlook to a range of $1.18 to $1.28.
Dean Foods Company traded up about 36 percent on Wednesday.
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